A complete or nearly complete list of employees, customers, vendors, and inventory items (if you buy and sell inventory)

You want to get all this stuff together before you start the QuickBooks Setup because (depending on how you go about setting up QuickBooks) you may be asked about this stuff as part of the setup. Don’t try to scurry around, looking for a particular piece of data while you are running the setup; collect this data up front. Then stack all the necessary paperwork on your desk next to your computer.

You are going to make several accounting decisions as you go through the QuickBooks Setup. For example, you may be asked to decide whether you want to use an accounts payable system. You may choose to use the setup to tell QuickBooks whether you want to send customers monthly statements.

You may also be asked whether you want to prepare estimates for customers. And you may also be asked whether you want to use classes to further track your income and spending.

In general, when you’re asked any of the accounting questions, you can simply accept the default answer. However, you are required by law to be consistent in your accounting for tax purposes. If you want to change your accounting — technically called a change of accounting method by the Internal Revenue Service — you must request permission to make the change from the IRS.

Be forewarned: The IRS insists that you be consistent in your accounting. If you’ve been treating particular items of income or expense in a certain way, the IRS says, Hey, dude, you must continue to treat them that way unless you get permission from us to change.

One final note: You should have your tax return from last year handy because it supplies information that you need for running the QuickBooks Setup. For example, last year’s tax return supplies your taxpayer ID number, your legal business name, and your method of accounting.

What happens during the QuickBooks 2012 setup

As you walk through the setup, you work with QuickBooks to set up the QuickBooks preferences (which determine how QuickBooks works and which features are initially available) and to set up a chart of accounts and your bank accounts.

The chart of accounts, just so you know, identifies those income, expense, asset, liability, and owner’s equity accounts that appear on your financial statements.

After you complete the QuickBooks Setup, you’re almost ready to begin using QuickBooks. In fact, in a pinch, you could (after the QuickBooks Setup) limp along with QuickBooks.

An important point of clarification: You might think that you should be ready to rock and roll after installing QuickBooks and running through the setup. However, you have two other tasks to complete after the QuickBooks Setup: identify your starting trial balance and finish the loading of your key master files.

The trial balance identifies your year-to-date income and expense numbers; and your asset, liability, and owner’s equity numbers as of the conversion date. The master files store information that you repeatedly use about customers, vendors, employees, and inventory items. For example, the customer master file stores a customer’s name and address, phone number, and the contact person.